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The Shape of Things to Come

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Authors: Chris Cook & Mahmood Khaghani*

Like everyone else, Iranians observed the extraordinary U.S. oil market events of 20th & 21st April 2020 and wondered what on earth was going on, and what it means for Iran’s future as a major oil producer.  In Tehran, in October 2008 I recall similar astonishment as the global dollar financial system experienced a meltdown from which Iran was safely insulated. 

It has been said that history does not repeat itself, but it does rhyme. Once again, Iran is insulated from market turmoil through US financial and physical oil market sanctions and is ‘on the outside looking in’. Global lockdowns are believed to have cut oil product demand by up to 30m barrels per day and this demand shock is propagating up the supply chain of refineries and oil distribution systems to producers at the well. 

Market shocks
Coronavirus has shocked the physical oil market into cardiac arrest. Fragmented and viciously competitive producer members of oil institutions such as OPEC and “OPEC+” have no viable response. The media stories everywhere of a Saudi/Russia “Price War” reminded me of two bald men fighting over a comb, because there is no physical demand other than for strategic reserves even for cheap oil until product oversupply is cleared and shut down refineries re-open.

Of course, this is not the first oil market cardiac arrest. In 2008, oil prices went into free-fall from a clearly manipulated ‘spike’ to $147/bbl in July 2008 all the way to $35/bbl in December and nothing OPEC did could arrest the fall. The reason was that the 2008 shock was not due to any lack of physical demand to refine oil, but rather to the inability of buyers to finance global oil deliveries as the dollar trade finance banking system froze as banks lost trust in each other.  In order to understand the current market cardiac arrest and how to revive the patient, I shall outline my perspective of US physical and financial energy strategy since 2008. 

Obama: Transition through Gas

The organising principle of US foreign policy has for 100 years been US energy security and independence and President Obama’s smart Transition through Gas energy strategy reflected this. The aim of Transition through Gas was to reduce US reliance on Saudi oil by increasing US oil production and to swing domestic and global energy investment to gas & renewable energy production and energy efficiency (‘Fifth Fuel’). 

Obama was a Wall Street president who took an unconventional approach to funding such colossal energy investment.  His strategy followed that of Henry Kissinger who convinced the Shah of Iran to agree to a 400% increase in oil prices after the 1973 ‘Oil Shock’ which had the effect of making development of Alaska, US Gulf, and North Sea oil economic. So immediately Obama took office in 2009 he acted to re-inflate, support and hold oil prices above $80/barrel for four years while capping politically sensitive US gasoline prices to avoid putting at risk his 2012 re-election. 

This four-year oil boom with prices between $80 & $120/barrel brought a wave of petrodollars from producers flooding into US Federal Reserve Bank (“Fed”) accounts, particularly from Saudi Arabia under an energy security agreement with U.S. made in 1945. To avoid exchange rate problems, the Fed created new petrodollars and swapped them for US Treasury Bills in a neutral asset swap operation termed Quantitative Easing (“QE”). However, the economic myth propagated by the Fed and sustained by uncritical global media was that this neutral financial asset swap could in some magical way act as a “stimulus” for the US economy when the true reason was to quietly accommodate oil producer Petrodollars. 

In order for oil producers to support high oil prices, they must be able to fund stocks of excess oil held off the market and be able to access bank finance for the flow of oil payments. In order to achieve this, Wall Street used new investment instruments: firstly ‘passive’ oil funds investing in oil market futures contracts, and secondly, secret Enron-style oil prepay funding.  

In this way, Wall Street and North Sea oil producers were able to support the global benchmark price set by ICE Brent/BFOE crude oil contracts, and Saudi Arabia’s BWAVE pricing formula based on it. From 2001 to date the North Sea oil market tail has wagged the global oil market dog.

So the vast inflows of petrodollars during President Obama’s first term in office enabled US banks to fund shale oil & gas and renewable energy projects, while historically high US fuel prices encouraged energy-efficient vehicles. By 2014 the US had transitioned from natural gas deficit to surplus; US shale oil production had increased by some 5m bpd, while fuel consumption had fallen by 2m bpd. Similar trends elsewhere of increasing supply and falling consumption saw structural global oil deficit quietly transform into a surplus.

In late 2011 in Tehran, with oil prices well over $100/bbl, I forecast to general disbelief that when the Fed ended QE, the oil price would collapse to $45/$50 bbl. This is exactly what happened when the US finally turned off the QE dollar hosepipe in 2014 while opening a massive military base in gas-rich Qatar. The US also commenced overtures to Iran bearing in mind both the greatest global gas reserves and immense development opportunities for low-cost oil long coveted by US oil majors.

In late 2014, Saudi Arabia awoke from a petrodollar coma to see their power over the US vanish along with their energy security. As a result, Saudi Arabia redirected oil proceeds to the Euro, where a main aim of European Central Bank policy since inception has been to back Euro currency with no intrinsic value with lending based on objective utility of oil and gas energy. So as with Fed dollar QE, the true reason for Euro QE in March 2015 was not stimulus but was simply to accommodate purchases of € securities. 

However, the unexpected election in November 2016 of President Trump changed everything.

Trump and energy dominance

Perhaps the most important of President Trump’s motivations, due to an intense personal animosity, is to erase Obama’s political legacy and in particular his energy strategy.  But it was a surprise to many observers that Gary Cohn (ex-Goldman Sachs and a Democrat) as Director of the US Economic Council and Rex Tillerson (ex-Exxon CEO) as US Secretary of State were willing and able to serve the Trump administration

Cohn architected and co-founded in 2001 what became the globally dominant Intercontinental Exchange (ICE) through which Wall Street came to dominate and financialise oil markets, while Tillerson was the most powerful US oil executive by far. Together they devised and implemented the US Energy Dominance strategy which was announced by President Trump on 29th June 2017.

As the name suggests, President Trump’s ‘America First’ doctrine when applied to oil and gas markets aimed to massively increase US production in order to dominate global markets with what officials have termed “Molecules of US Freedom” and so take back control of global oil market pricing via oil & gas exports.

So on 1st July 2017 after 16 years of pricing oil using the ICE BWAVE formula, Saudi Arabia switched to prices generated by the Platts reporting service for cargoes of Brent/BFOE oil. For six months huge passive fund investment poured into global oil futures contracts, thereby re-inflating the price. Three months later at the end of March 2018 and nine months to the day after the strategy commenced, Cohn and Tillerson simultaneously left the Trump administration, leaving the strategy to be rolled out over the next two years.

So for the next 18 months, the Fed steadily reduced its balance sheet by selling Treasury Bills to release dollars. Within six months in September 2018, the ECB ended Euro QE, and Fed Treasury Bill sales continued until September 2019. 

U.S. and the oil standard

Whoever was responsible for the Abqaiq attack on Saturday, 14th September 2019, the resulting spike in oil and product prices required massive amounts of dollar funding to cover losses on derivative contracts. So Monday 16th September saw an unprecedented ‘spike’ in the sale and repurchase (“Repo”) of US Treasury Bills through which the Fed supplies dollar liquidity to four major US clearing banks. However, this massive Repo spike was only the beginning: from then on, the programme of exchanging dollars for short term Treasury Bills involving only these four banks which became known as ‘NotQE’ continued at a rapid rate.

Meanwhile, through the second half of 2019, oil prices were otherwise stable in a range between $55 and $60/barrel. The more the price exceeded $60/bbl the more shale producers sold oil forward, which enabled them to borrow from banks to finance drilling. When prices fell below $55/barrel, financial buyers appeared.
As a result, the US petrodollar funding system has quietly been completely reconfigured, as Saudi PetroEuros returned to U.S. to be swapped for short term Treasury Bill petrodollar holdings. Where petrodollars indirectly funded shale oil producers through bank lending, shale oil production will now be funded via the same three-way prepay mechanism used by Enron for a decade to secretly defraud their investors and creditors. The difference now is that where Enron’s third-party funders were two of the Big Four private banks, now it is the Fed itself which is the third party funder.

Meanwhile, the waves of debt advanced to the US shale oil industry are beginning to come due and the Big Four banks are all preparing to foreclose on these debts and take ownership of shale oil assets. These banks plan to use production sharing LLC ‘capital partnerships’ with operating partners while oil majors such as Exxon appear also to be aiming to consolidate distressed shale oil assets using similar funding.

So to cut a long story short, the planned outcome of the US Energy Dominance financial energy strategy, was to support and loosely peg oil prices by controlling the benchmark price around $55 to $60/barrel.  By pegging the dollar to an “Oil Standard” in this way prepay funding of US oil reserves has essentially monetised US oil 

Enter the dragon

Producers have controlled the oil market for so long they believe this to be their God-given right, forgetting that buyers are also capable of asserting market power. For years China’s energy strategy has been to build and fill enormous oil storage capacity, now in excess of 1.2 billion barrels, while a fleet of new and efficient oil refineries has been built with capacity well in excess of China’s product needs, and aimed at exports. 

As Iran is painfully aware, China’s ability to ignore US sanctions means that they have become oil buyer of last resort at distressed prices, and may, therefore, dump cheap oil products into the market with which other refiners cannot compete. China has also discussed cooperation with other major oil buyers, particularly India. Other countries in oil deficit, notably EU nations, also have an incentive to join a cooperative ‘buyer’s club’.

So in my view, China has been preparing for years to assert ‘buy-side’ consumer oil market pricing power and the unprecedented demand shock propagating from China has created the perfect opportunity. When the oil market recovers from this cardiac arrest which broke the US/Saudi oil peg I believe that China can and will assert buy-side market power, probably in loose cooperation with other major consumers who see no reason to continue to transfer up to an additional $30/barrel to producers.

Oil wars

The story of a so-called oil war between Saudi Arabia and Russia aimed at killing off US shale oil production is a myth: the true struggle for market share appears to be an attempt by a US/Saudi Arabia partnership to out-compete Russian oil sales to Europe and elsewhere. Whatever the geopolitical truth of it, the collapse of product demand far in excess of any feasible voluntary oil production cuts makes talk of market share redundant, when there simply is no market to share.

So once enough refineries shut down to allow surplus oil on the market to begin to clear and a physical market price to re-emerge we will see two struggles begin. Firstly the struggle between buyers and sellers, and when, as I expect, the buyers win, the continuing struggle for oil market share between producers.

In my view, the crazy spike in prices of the US WTI oil futures benchmark price to a negative price of $37/bbl represents a historic point of failure from which the contract will not recover. It seems to me there is now an urgent need for a temporary resolution of the broken oil and products markets while a transition to new and sustainable global energy and financial markets get underway.

On the outside looking in
 
As the great author, Arthur Conan Doyle wrote: “Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth” 

Iran now has no options other than to pursue improbable and unorthodox market solutions in order to resolve an impossible economic situation, by a two-stage process of resolution and transition. The resolution step is to re-purpose existing structures and infrastructure with no change in the law. This then provides the basis for proof of concept of smart market and energy fintech innovations which enable transition to sustainable low carbon and low cost physical and financial solutions.

Resolution

My colleagues and I have long promoted 21st C Iranian physical and financial markets in oil products, but these have always been resisted by vested interests.  However, global collapse of product prices has now seen Iranian product prices converge with neighbouring countries, thereby neutralising certain vested interests. Our proposal for an interim resolution of Iran’s economy builds upon existing subsidy and rationing policy and technology for oil products.

Firstly, our innovation is to simply for the government to issue an “Energy Dividend” of vouchers or credits, to Iran’s population, each of which will be accepted in payment for products.

Because the Euro 5 standard for gasoline is used throughout Eurasia, we propose that each “Energy Credit Obligation” (ECO) will be returnable in payment for 1 litre of Euro 5 gasoline. Such standard ECOs will also be accepted by refiners and distributors, in payment for other fuels at a discount or premium to Euro 5 gasoline.

Refineries who issue such ECOs would no longer buy crude oil in exchange for conventional currency such as riyals or dollars since to do so exposes them to the risk of oil price fluctuations. Instead, refiners will enter into production sharing partnership agreements or oil/product swaps with oil suppliers in exchange for a percentage entitlement to the flow of ECOs.

So the ECO represents prepayment backed by the Iranian government and energy complex for the eternal intrinsic use value of energy, and in uncertain times many investors seek such assets. In order to build trust in the ECO, issuance must be transparent to everyone, and I addition must be overseen by professional service providers with a stake in the outcome who manage issuance and redemption of ECOs against use.

Transition

The ECO represents a fixed point upon which 21st C smart energy markets and economy may be introduced by Iran’s greatest resource – one of the greatest global pools of intellectual capacity – to collaborate in solving humanity’s greatest challenges.

*Mahmood Khaghani, former director-general of the Caspian Sea and Central Asia Department at Iran’s Ministry of Petroleum. He is now an advisor to IRIEMP- University of Tehran & Education and Research Institute -ICCIMA

From our partner Tehran Times

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Energy

Maximizing Nickel as Renewable Energy Resource and Strengthening Diplomacy Role

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Authors: Nani Septianie and Ramadhan Dwi Saputra*

The development of the times and technology, the use of energy in the world will continue along with the increase of population. Global energy demand is currently recorded to have increased three times since 1950 and its use is estimated to have reached 10,000 million tons per year. Most of the energy is produced from non-renewable materials such as coal, gas, petroleum, and nuclear energy. Besides being non-renewable, fossil-based energy is also not environmentally friendly because burning fossil fuels produces CO2 gas which can cause global warming. Based on the energy used previously, the world still uses fossil energy that used in conventional vehicles that still use gasoline as fuel. Where fossil energy itself is still classified as the energy that is not environmentally friendly because it produces carbon emissions that can pollute the environment. Therefore, the world is currently flocking to make renewable energy by electric vehicles that are more environmentally friendly.

In electric vehicles, batteries play a very important role in the components of electric vehicles. Currently, there are two types of batteries that are the most common and widely used for electric vehicles. The first is a lithium-ion battery and the second is a nickel-based battery. But keep in mind for the type of lithium-ion battery itself, nickel is also the main raw material needed. Lithium-ion batteries commonly used to store power in vehicles are Lithium Manganese Oxide (LMO), Lithium Nickel Manganese Oxide (NMC), Lithium Nickel Cobalt Oxide (LTO). The reason for using nickel as a raw material for electric vehicles batteries is more environmentally friendly, nickel is also considered to be more efficient. Because nickel is a metal that has a high energy density storage and cheaper than using other types of minerals such as cobalt. As the popularity of electric vehicles continues to climb due to their increasing demand, the future of nickel production will also be brighter in future. Demand for automatic mining commodities will continue to grow, to encourage companies and producing countries to be eager to increase production.

Reporting from Investing News, Monday (10/26/2020) there are 10 largest nickel producing countries in the world, namely the United States in the tenth position with total production: 14,000 Metric Ton (MT, the ninth position Cuban countries with total production: 51,000 MT, the ninth position is Cuba the the eighth countries are Brazil with total production: 67,000 MT, the seventh position is China with a total production of 110,000 MT, the sixth position is Canada with total production: 180,000 MT, the fifth position is Australia with total production: 180,000 MT, the fourth position is New Caledonia with a total production: 220,000 MT, the third position is Russia with a total production of 270,000 MT, the second position is the Philippines with a total production: 420,000 MT, and the first position is occupied by Indonesia with the largest total production of 800,000 MT. Indonesia has been used as a benchmark by many parties regarding the seriousness of a country to enter the Nickel trend. In 2019, it was reported that nickel production will be bigger than palm oil production, which is the second largest commodity to be exported. Its relatively affordable distance from China, which is a leading country in the production of electronic vehicle manufacturers, makes the export process of this commodity very ideal. Indonesia also still has nickel reserves of 21 million MT.

Nickel is an important component in the production of electric vehicles, which can be used as raw materials for long-term sustainable battery manufacturing to create a clean environment. Where nickel as the main raw material for the manufacture and operation of electric vehicles has contributed to reducing carbon emissions. Based on the Union of Concerned Scientist explains that battery production contributes of global warming emissions and decreases to 43% where this decrease depends on the chemicals used in the manufacture of battery raw materials. Making electric vehicle batteries is indirectly appropriate with the commitments of the Paris Agreement and the Sustainable Development Goals Agenda (SDGs) at point 13 to combat Climate Change in reducing carbon emissions to achieve a climate-neutral world. Therefore, each country is needed to cooperate and maximize diplomatic strategies between countries to fulfill the source of raw materials for the manufacture of electric vehicle batteries, especially nickel.

Countries are needed to maximize diplomacy activities to create an equal distribution of electric vehicle production

Therefore, the large production of electric vehicles shows that in the future each country will need a supply of raw material for the production of batteries, namely Nickel which is the main raw material for making batteries. electricity. This phenomenon shows that the largest nickel producing countries have an important role in achieving the contribution of raw materials for the manufacture of electric vehicle batteries. However, with the large production in each country that has an abundance of nickel, the country cannot stand alone. Instead, it is also necessary to distribute nickel production in other countries by sharing raw materials, which can be carried out using a diplomatic strategy.

Therefore, diplomatic activities between countries are very important to complete all the shortcomings possessed by each country. Each country can use its negotiation skills in achieving its national interests and the needs of each country. However, countries that have a large abundance of energy resources, especially nickel, which is the main raw material for the manufacture of electric vehicle batteries, should not continue to export excessively, but countries that have these energy sources must continue to limit the number of exports. Because nickel is an energy resource, the wealth of this energy resource must be maintained to prevent the depreciation of nickel reserves. Therefore, each country is required to carry out diplomacy, including strengthening the bargaining power of each country, negotiating to create an even distribution of nickel supply, complementing the needs that each country lacks in assembling electric vehicles, and Each country is required to form a sustainable plan as a long-term strategy to ensure that electric vehicles can continue to be produced in the future, especially nickel which is the main raw material in the manufacture of electric vehicle batteries.

*Ramadhan Dwi Saputra, Chemical Engineering Research Assistant at Universitas Islam Indonesia.

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Gas doom hanging over Ukraine

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The long history of gas transit across independent Ukraine began with Kiev’s initial failure to pay anything for Russian natural gas, both intended for transit to Europe and for domestic consumption, on the pretext of fraternal relations between the former Soviet republics. Later it cost the Ukrainians a meager $25 for 1,000 cubic meters of Russian gas, and that ridiculously small sum remained unchanged for quite some time. The sizeable amount of Russian gas provided at a discount price, plus domestically available oil resources, were distributed by the country’s greedy elite the following way: domestically produced gas was used on utilities, proceeds from the transit of Russian gas went to the state budget (minus the money that lined bureaucratic pockets), and Russian gas – to the industry (plus the corruption component).

Then came the Ukrainian revolutions and Kiev’s desire to join “Euro-Atlantic structures” and the desire to “get off the Russian gas needle and prevent the Kremlin from using energy as a weapon.” Ukraine has tried and is still trying to believe in all this by playing up to the collective West and hoping that the West will compensate Kiev for the losses caused by its revolutionary endeavors and anti-Russian antics. As a result, we see gas prices going through the roof, an energy crisis in Europe, and the completion of the Nord Stream 2 gas pipeline.

Those in power in Kiev hoped for the very last moment that the West valued their country more than it did the energy security of European countries. Much to their surprise (and only theirs), this is not so. It looks like the Europeans are interested in Russian gas supplies and are not so eager to keep Ukraine as the main transit country. Moreover, having “democratized Ukraine” to the state of an openly anti-Russian country, the West turned it into a country, whose leadership the Kremlin does not really want to talk to simply because it does not see any point in doing this. This is the reason why third countries care (or rather pretend to care) about Ukraine. Thus, in July of this year, there came out the “Joint Statement of the United States and Germany on Support for Ukraine, European Energy Security and Our Climate Goals.” According to it, Germany pledged to do everything in its power to make sure that the agreement between Moscow and Kiev on the transit of Russian gas across Ukrainian territory was extended for up to ten years. The statement came when it was already obvious that the construction of Nord Stream 2 would be completed, Germany resisted US pressure on this issue, Moscow paid no attention and Washington, exhausted by the battles of the presidential elections and the search for new strategies in the Old World, was trying to pit America’s European friends against Russia.

It has never been a secret that the West needs reliable transit, and this is something that Ukraine also insists on. However, Kiev has officially labelled  Russia as an “aggressor country,” which means that this very “aggressor” must ensure this transit and bring billions of dollars in revenues to the Ukrainian budget. This looks like a kind of “Euro-schizophrenia” where Ukraine is an anti-Russian country and simultaneously serves as a reliable transit country for Russian gas. Things do not work this way, however, and it looks like Europeans are beginning to realize this. Therefore, most of the European consumers support Nord Stream 2 even though they do not show this in public. Suffice it to mention the recent conclusion of a years-long contract for gas supplies to Hungary.

Vladimir Putin’s statement, made amid soaring gas prices and growing threats to European industry, came as an energy lifeline for all Europeans.

“Russian President Vladimir Putin supported the initiative of Deputy Prime Minister Alexander Novak to increase gas supply on the market amid rising energy prices in Europe… Novak said that Russia can stabilize the situation with prices by providing additional volumes of gas on the exchange, adding that this country’s main priority is to accommodate domestic demand,” Lenta.ru reported.

Commenting on the possibility of increasing gas supplies via Ukraine, President Putin recalled that Ukraine’s gas transport system had not been repaired “for decades” and that “something could burst” there any time if gas pressure goes up.

“At the same time, it is more profitable and safer for Gazprom to operate new pipeline systems,” he added. Putin thus confirmed what is already clear to all that Ukraine is an unreliable and, in fact, an extra link, and that Europe can get gas bypassing technically and politically unreliable Ukrainian pipes. He also pointed out that Gazprom would suffer losses from an increase in gas transit via Ukrainian territory, while new gas pipelines offer cheaper transit options. He added that Gazprom is saving about $3 billion a year by using new pipelines and that Russia was ready to increase gas supplies and make them cheaper for European consumers.

Gas shortages have already forced the Ukrainian government to freeze gas prices for household consumers, but prices for gas for industrial enterprises are rising along with those on European exchanges, where on October 6, they reached a very impressive $ 2,000 per thousand cubic meters and went down only after Putin’s statement came out.

Meanwhile, the head of Ukraine’s Federation of Glass Industry Employers, Dmitry Oleinik, said that this [rise in gas prices – D.B.] would lead to an inevitable rise in prices. However, producers will not be able to jack up prices indefinitely, because at some point buyers simply will not be able to cover production costs.

“The Ukrainian consumer will not even be able to cover the cost of production. Plants and factories will slowly shut down and people will lose their jobs – this is already very serious. Budget revenues will “plummet,” and expenses will skyrocket… The issue of bankruptcies is just a matter of time,” Oleinik warned.

If Ukraine continues to follow the chosen course, it will face de-industrialization. By the way, this will suit the West, but certainly not the Ukrainian industrial oligarchs, who have long been eyeing agriculture, including the prospect of turning themselves into land barons. However, the farming sector will not be happy about the high prices on gas that bakeries, sugar factories and greenhouses run on. There will be nowhere to run.

Apart from purely practical realities, the conclusions I can draw from the current energy situation in the world and Vladimir Putin’s statements regarding the Ukrainian transit, are as follows:

  • Gas supplies through Ukraine and to Ukraine are not solely an economic issue, given Kiev’s endless anti-Russian escapades;
  • This problem affects the energy security of Europe;
  • Since there are several angles to this problem, it must be solved in a comprehensive manner;
  • At the same time, this cannot be done exclusively in the interests of the West and Ukraine to the detriment of the interests of Russia.

As you can see, it is once again up to Kiev and its shadow patrons to decide. And winter is just around the corner…

From our partner International Affairs

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Russian Energy Week: Is the world ready to give up hydrocarbons?

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In an official message to mark the opening of the Russian Energy Week international forum on 13-15 October in Moscow, Russian President Vladimir Putin stressed that there are numerous issues on the agenda related to current trends in the global energy market, including improvements to industry infrastructure and the introduction of modern digital technologies into its operation.

“The efficiency of energy production and consumption is the most important factor in the growth of national economies and has a significant impact on people’s quality of life. Many countries have already adopted policies to accelerate the development of clean energy technologies,” he wrote in the message to guest and participants.

“The forum business programme is therefore set to look in detail at the possibility of developing green energy based on renewable sources and the transition to new, more environmentally friendly fuels. I am confident that the events of the Russian Energy Week will allow you to learn more about the achievements of the country’s fuel and energy sector, and that your initiatives will be put into practice,” Putin said.

Leaders of foreign states have also sent greetings to the participants and guests. For instance, President of the Republic of Angola João Manuel Gonçalves Lourenço, Prime Minister of Vietnam Pham Minh Chinh, Crown Prince of Abu Dhabi Armed Forces Mohamed bin Zayed bin Sultan Al Nahyan, and Vice Premier of the State Council of China Han Zheng.

In their greetings, it generally noted the importance of the topics to be discussed at the forum as well as the need to build an international dialogue and consolidate efforts to achieve the sustainable development goals, including as regards climate change.

The programme covers a wide range of issues of transformation and development in the global energy market. In the context of energy transition, the issues of energy development are inextricably linked with the introduction of new technologies, and the transformation aimed at reducing greenhouse gas emissions into the atmosphere. Climate protection is a task that cannot be solved by one country; it is a global goal, which can be achieved through building dialogue and cooperation between countries.

The participants in the discussion will answer the question: Is the world ready to give up hydrocarbons? In addition, during the panel session, the participants will discuss whether oil, gas and coal are really losing ground in the global energy sector; whether the infrastructure will have time to readjust for new energy sources; how long will there be enough hydrocarbons from the field projects that are being implemented; and whether an energy transition using fossil fuels is possible.

The international climate agenda is forcing many countries to reform their carbon-based energy systems. For Russia, which holds a leading position in the global hydrocarbon markets, the transition to development with low greenhouse gas emissions presents a serious challenge, but at the same time it opens up new opportunities for economic growth based on renewable energy, hydrogen technologies, advanced processing of raw materials and implementing green projects.

The Climate Agenda included sessions dedicated to the operation of the Russian fuel and energy sector in the context of energy transition, the impact of the European green pivot on the cooperation between Russia and Europe, as well as the session titled ‘The Future of Coal in a World Shaped by the Climate Agenda: The End, or a New Beginning?’

Sessions of the ‘New Scenarios for the Economy and the Market’ track are dedicated to the global challenges and opportunities of the electric power industry; the impact of ESG on the Russian fuel and energy sector; the potential for the renewable energy sources; and other issues of the future of energy.

The Russian Energy Agency under the Ministry of Energy brings together experts from key international analytical organizations to discuss the future of world energy during the session titled International Energy Organization Dialogue: Predicting the Development of Energy and Global Markets.

The Human Resource Potential of the Fuel and Energy Sector, participating experts will discuss the prospects for developing the professional qualification system, and a session titled Bringing the Woman’s Dimension to the Fuel and Energy Sector. Optimizing regulation in the energy sector and organizing the certification and exchange of carbon credits in Russia are the basis of the Regulatory Advances in Energy. 

Anton Kobyakov, Advisor to the Russian President and Executive Secretary of the Russian Energy Week 2021 Organizing Committee, said “the level of various formats of international participation testifies to the importance of the agenda and Russia’s significant role in the global energy sector. We are a reliable strategic partner that advocates for building international cooperation based on the principles of transparency and openness. With the period of major changes in the industry, it is particularly important to engage in a dialogue and work together to achieve both national and global goals.”

The forum, organized by the Roscongress Foundation, the Russian Ministry of Energy, and the Moscow Government, brought together many local and foreign energy and energy-related enterprises. The speakers attending included  Exxon Mobil Corporation Chairman of the Board of Directors and CEO Darren Woods, Daimler AG and Mercedes-Benz AG Chairman of the Board Ola Kallenius, BP CEO Bernard Looney, and TotalEnergies Chairman and CEO Patrick Pouyanné.

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